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Should the US retire the penny ?

Discussion in 'American Politics' started by Usethepen, Jan 17, 2013.

  1. Usethepen

    Usethepen Newbie

    91
    +13
    Deist
    Private
    Canada is working on retiring the penny.

    Should the US do the same?
     
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  2. trunks2k

    trunks2k Contributor

    +2,882
    Humanist
    Married
    US-Others
  3. Bubbahotep

    Bubbahotep Guest

    +0
    Just stop making them. I think we have enough in circulation that it won't even be noticed.
     
  4. Panzerkamfwagen

    Panzerkamfwagen Es braust unser Panzer im Sturmwind dahin.

    +21
    Christian
    Single
    US-Libertarian
    No. If we do, then the nickel become the new penny. Nickels are more expensive to produce than they're worth, too.
     
  5. Sophrosyne

    Sophrosyne Let Your Light Shine.. Matt 5:16

    +41,589
    Christian
    With sales tax rates of fractions of percentages out there trying to figure out which nickel rate to charge a customer for a purchase and who gets to keep or lose the cents below 5 in purchases makes things a mess. One way around it is to come up with 2 cent pieces you can then use nickels and them to come up with any number other than just a penny. This would make a purchase of 15.97 require someone give you 17.00 so they can give you back more than a 3 cents in change and any purchase that would give back less than 4 cents in change and not 2 cents (1 & 3 cents) you would also need to give an extra dollar to pay for.
     
  6. kermit

    kermit Legend

    +777
    Christian
    Married
    US-Democrat
    I vote no. The only change will be that prices ending in .99 will be rounded up and sales tax will be rouned up to the nearest nickel. In PA that means that mean a $0.99 item that costs $1.05 (.99 * 1.06) with tax will become $1.10 (1 * 1.10).
     
  7. dgiharris

    dgiharris Newbie

    +5,126
    Baptist
    No, if you retire the penny than you end up raising the cost of trivial items because everything gets rounded up to the next 5 cent increment.

    So, items that cost $2 or less you end up increasing the cost by 1% - 10%.

    It sounds trivial but its not. There is a cumulative effect with the end result of increasing the cost on EVERYTHING by 1% to 3%.

    Would you mind if the government increased your taxes by 1% - 3%?

    that would be the equivalent if you were to retire the penny. Its counter-intuitive but its the truth. Eliminate the penny, and you more or less increase your total costs by 1% - 3% since increasing costs to the next 5 cent increment will be cumulative...

    HERE IS AN EXAMPLE

    Instead of truck drivers paying $4.03 cents per gallon they now pay $4.05 per gallon. That extra 2 cents increases their costs by 0.5%. That 0.5% cost needs to be marked up to 1% in order to handle their overhead.

    So as a manufacturer, my shipping costs now increase by 1%. So in order to handle that i've got to increase what I charge for production and in order to cover overhead. So, I increase my cost by 2%.

    As a retailer buying from the manufacturer, my products have now gone up 2% in costs. So in order to cover that cost I've got to pass that onto the consumer depending on my profit margin. The retail industry usually has a profit margin between 5% - 50% depending on the industry.

    So, the increase to the consumer will be anywhere from 2.05% to 3%...

    and all of that is due to just getting rid of one tiny insignificant penny :(
     
  8. trunks2k

    trunks2k Contributor

    +2,882
    Humanist
    Married
    US-Others
    Except that several other countries have abandoned their pennies, as has the US Armed Services (overseas), and we've already gotten rid of the half penny when it had more buying power than the dime does today, and there's been no negative effects that I am aware of.

    Also, you are missing that per unit prices wouldn't be rounded, you would round the final, total, after tax price to the nearest nickle. Let's take the gas at $4.03 a gallon (ever notice that gas is often listed as $X.YZ99/gallon? same thing here), yes if you bought a single gallon, it would be $4.05. But you don't buy a single gallon a dozen times over; you by would buy 12 gallons. So lets say you buy 12 gallons of gas, you would still be paying $4.03 a gallon 12*4.03=$48.36. So you would pay $48.40. If you bought, say 11.54 gallons, it would be $46.5062, which would round to $46.50. Over time the round ups and round downs cancel each other out.

    On top of that, pennies themselves are a drain on the economy. So we lose money just by the fact that pennies exist.
     
    Last edited: Jan 17, 2013
  9. Sophrosyne

    Sophrosyne Let Your Light Shine.. Matt 5:16

    +41,589
    Christian
    Actually you would have to require a roundoff scheme something like this:
    1-2 cents rounds down
    3-4 cents rounds up
    You could have "smart" retailers repricing things to get that 1-2 cents more but on multiple item purchases it would probably break even. This would be a nightmare for cashiers to figure out when to round up or down I don't think most would be able to do so properly which means cash registers would have to be programmed to either round up/down and/or display or not display it did so or some sort of card that could accept and give out change in amounts less than a nickle with no fees would have to be created.
     
  10. Usethepen

    Usethepen Newbie

    91
    +13
    Deist
    Private
    .
     
  11. dgiharris

    dgiharris Newbie

    +5,126
    Baptist
    In business, you never ever EVER round down. 99.9999999% of the time it would be rounded up to the next 5 cent increment.
     
  12. Sophrosyne

    Sophrosyne Let Your Light Shine.. Matt 5:16

    +41,589
    Christian
    You would if the government told you to do so. Businesses accept credit cards which costs them sometimes up to 6% of their transaction and probably closer to averaging about 1.5% if volume is high enough. Businesses would just raise their prices the 2% they are expected to lose on half their transactions and go with it.
     
  13. jayem

    jayem Naturalist

    +5,281
    Atheist
    Married
    I'd rather keep the penny and get rid of the paper dollar. Replace it with a dollar coin, that can stay in circulation much, much longer.

    Personally, I'd be ok with getting rid of all currency > $20, and require all larger purchases to be made with credit/debit cards or other electronic means of exchange. I know some people don't have bank accounts, and there are privacy and security concerns. Going cashless would make life more difficult for drug dealers, and might obviate some street crime. It would have to be phased in gradually so people can adjust.
     
  14. dgiharris

    dgiharris Newbie

    +5,126
    Baptist
    The government cannot direct a business in matters of pricing. And even if they could, business owners would then just price all their items such that they can round up.

    Doesn't matter "how" it happens, all that matters is that it will "happen" and the end result is that you get the price increase I showed...
     
  15. dgiharris

    dgiharris Newbie

    +5,126
    Baptist
    It will never happen. We've been trying to go "paperless" for the past two decades and people keep underestimating the ease and convenience of cash.

    For instance, a tremendous amount of purchases occur between CITIZENS. With all the identity theft out there I'm not comfortable giving Joe Schmo who I don't know my credit card number. Its just easier to deal with him in cash. Then there are "rights to privacy" types that do not want their transactions being tracked by the government or the powers of commerce (i.e. greedy businesses).

    Then there are bank and credit transaction fees that you don't have to pay with cash...

    So, its basically impossible to go paperless. It just will never happen. Yes, credit and debit is becoming more and more the principle means of commerce, but it will never replace cash completely just as written documents will never be phased out completely.

    Think about it. Even with emails, and I-Pads, and smart phones, and laptops, etc etc why is it that companies and offices still have printers and still deal in paper? Because, you just can't get rid of it. No matter how hard we try, the fact is, paper still serves purposes that electronic screens cannot. Thus, it is impossible to eliminate.

    Same thing with cash...
     
  16. Sophrosyne

    Sophrosyne Let Your Light Shine.. Matt 5:16

    +41,589
    Christian
    I don't think the 1-2 cents bit is that huge of a concern for retailers as they love marking things at 99 cents vs $1 in many cases and that loses them 1% on a dollar item or 2% on a 50 cent item. I often wonder if some businesses price things different because of sales taxes as there are prices such that a 1 penny increase in price costs you an extra penny in sales tax. Businesses that don't have computerized cash registers sometimes use total sales before sales tax to figure out what they owe in sales tax and that can net them extra profit as they collect more in tax than they pay out.
     
  17. Douger

    Douger Veteran

    +817
    Christian
    I say keep the penny. If the current penny is worth more than 1 cent, then make a cheaper penny :doh:
     
  18. dgiharris

    dgiharris Newbie

    +5,126
    Baptist
    They did.

    If you look at the penny, all pennies dated before 1982 are 100% copper and worth about 3 cents in copper.

    Now they add zinc to the copper and if you look at all the new pennies, they are shiny brown/orange-ish and the old pennies are dark brown...
     
  19. Douger

    Douger Veteran

    +817
    Christian
    I heard they still cost more than 1 cent to make.
     
  20. dgiharris

    dgiharris Newbie

    +5,126
    Baptist
    Yeah, I think that's true.

    I never really thought about it... this brings about an interesting economic quandry...

    should currency be cheaper than it is to make?

    Or specifically, what is the impact of currency that has more intrinsic value than its domination???

    Some quick google-fu shows that iron is the cheapest metal... Maybe we should start making pennies out of iron??? Or maybe some weird ceramic mix???
     
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